The ROI from communities and collaboration
Posted by Mukund Mohan at 3/3/2007 3:13 PM and is filed under Resources,Business Justification,Internal Community,Best Practice 
Noticing several people start to talk about ROI from communities, social networking and collaboration. Dave Hersh of Jive Software submits:
"I've been getting a number of reporters asking about the ROI behind an application like Clearspace lately. My general response is that it's a fool's exercise. Trying to determine if the savings and revenue increase are worth the expense is like trying to measure whether the view from atop Everest was worth the climb — it's exceedingly hard to measure and it should be painfully obvious."
Matthew Lees also has a piece written up on measuring success of online communities. He mentioned in a discussion that a lot of organizations are not asking for serious ROI since there is an executive who in their "gut" believes this is the right thing to do.
Selling to IT organizations for 15+ years I know that most IT folks have been conditioned around documenting the ROI for any project before they purchase it. In fact due to the "willy nilly spending of 2000", many companies now have a rigirous IT project justification process where any buyer has to submit all this information, and it goes into a committee which decides if they should proceed or not.
I suspect Dave's has been talking to IT pubs like InfoWorld, Information week etc. whose users demand ROI (which has led to a new magazine in itself - Baseline Magazine). So, my suggestion: if you want to get written up in IT pubs, you ought to have a perspective on where the ROI might be based on previous customer input.
Else you can always target the business teams that need collaboration internally like Customer support team, or Sales engineering team, etc. bypassing the IT folks if you provide a hosted on-demand solution. Then the ROI question is less frequent.
Here are some examples of where ROI might exist for specific collaboration projects in our experience:
1. Sales engineering organization: Reducing time to obtain key information that lies in other SE minds, which reduces time to closing a sale, which is monitored by productivity gains.
2. Customer support collaboration: Reducing number of cases by allowing support personnel to collaborate with one another and provide documentation quicker. This reduces the number of cases opened, showing up as reduced headcount and lower cost of customer support.
What do you think? Where have you seen some experiences of ROI in collaboration and communities?
"I've been getting a number of reporters asking about the ROI behind an application like Clearspace lately. My general response is that it's a fool's exercise. Trying to determine if the savings and revenue increase are worth the expense is like trying to measure whether the view from atop Everest was worth the climb — it's exceedingly hard to measure and it should be painfully obvious."
Matthew Lees also has a piece written up on measuring success of online communities. He mentioned in a discussion that a lot of organizations are not asking for serious ROI since there is an executive who in their "gut" believes this is the right thing to do.
Selling to IT organizations for 15+ years I know that most IT folks have been conditioned around documenting the ROI for any project before they purchase it. In fact due to the "willy nilly spending of 2000", many companies now have a rigirous IT project justification process where any buyer has to submit all this information, and it goes into a committee which decides if they should proceed or not.
I suspect Dave's has been talking to IT pubs like InfoWorld, Information week etc. whose users demand ROI (which has led to a new magazine in itself - Baseline Magazine). So, my suggestion: if you want to get written up in IT pubs, you ought to have a perspective on where the ROI might be based on previous customer input.
Else you can always target the business teams that need collaboration internally like Customer support team, or Sales engineering team, etc. bypassing the IT folks if you provide a hosted on-demand solution. Then the ROI question is less frequent.
Here are some examples of where ROI might exist for specific collaboration projects in our experience:
1. Sales engineering organization: Reducing time to obtain key information that lies in other SE minds, which reduces time to closing a sale, which is monitored by productivity gains.
2. Customer support collaboration: Reducing number of cases by allowing support personnel to collaborate with one another and provide documentation quicker. This reduces the number of cases opened, showing up as reduced headcount and lower cost of customer support.
What do you think? Where have you seen some experiences of ROI in collaboration and communities?
We just finished a research project about OC metrics, and we asked the respondents specifically about ROI.
More companies are actively quantifying and reporting ROI metrics than you would think. Things like lead generation, average revenue per member, rev of member to non-member, etc.
I'll be pseaking more about this at c2.0.
Sorry for the cross post, but for me the best place for looking at ROI is tying those measures back to insight collection which I discuss here: http://communitygrouptherapy.com/2007/02/19/online-discussions-insights-you-could-use/. I think web measures are important to. Page views is ok. Unique users better. Return users even better. In the end, what you want to know is did they get what they wanted and how that impacts their perceptions (liklihood to recomment, repurchase, advocate, provide feedback on, etc).
sean
I like the idea exchange this got going